Effectiveness lies in the balance – what I call the P/PC Balance. P stands for production of desired results, the golden eggs. PC stands for production capability, the ability or asset that produces the golden eggs.

The P/PC Balance

The P/PC Balance is about balancing between two extremes:

Extreme #1: Focusing only on golden eggs or producing short-term results. In the long-run, you lose your ability to produce results at all because you never nurture your production capacity.

Extreme #2: Focusing only on the goose or production capacity. Without short-term results, you will not survive (literally or figuratively) to see the long-term payoff.

Either extreme is a problem. So, you have to strive for a balance between the two. And that delicate balance is the essence of effectiveness.

You have to work at this balance if you want to be consistently effective in any area of your life. This includes your job, ability to earn money, real estate investing, relationships, and health.

Here are some common examples where a focus on P/PC Balance can be helpful.

Financial

Rental Properties: You must balance current cash flow with long-term value. It’s tempting to keep all of your profits and not reinvest any into maintenance, upgrades, or taking care of your tenants. But without long-term thinking, the property’s financial strength will decrease over time.

Personal Salary: You must balance your current job responsibilities with personal improvement. Activities like professional development and nurturing strategic relationships require time and money now. But these activities increase your professional value over the long run. On the other hand, you can’t spend all of your time improving yourself. You’ve also got to get things done right now!

Investment Earnings: A big lump sum of money invested in good assets has the ability to produce earnings. These earnings could come from interest, dividends, rent, or capital gains. If you “eat” too much into your principal, you reduce your long-term investment earnings and growth. But if you don’t take enough earnings, you may not be able to enjoy your life! This healthy balance of investment withdrawal is the essence of the debate around the 4% safe withdrawal rule.

Physical

Lawn Mower: A brand new lawn mower will cut grass well for a while. But without regular maintenance, it will break down and stop working. Running a machine into the ground and having to buy a new one is typically much more expensive than just doing regular maintenance along the way.

Your Health: If you want more short-term results, don’t waste time with exercise, eat unhealthy food on the go, sleep too little, fail to take time for recovery, and avoid regular medical check-ups. But over the long-run, these short-term time-savers will cause the golden goose (aka your body) to get sick and no longer produce anything at all!

The Natural Environment: If our society focuses only on current economics and growth, we will deplete or pollute the natural environment which supports all of our wealth. Climate change is a prime example. But if we overburden the current economy with too many long-term environmental protections, we create real economic hardships right now. It’s a tricky balance.

Relationships

Parenting of Children: My 5-year old rarely cleans her room easily. It’s normally a long, distraction-filled struggle. I could surely clean up the room faster by myself. This would be a focus on the production or golden eggs. But what would that do to the golden goose of my child’s future clean rooms, her sense of responsibility, and her ability to finish what she starts? Parenting provides a never-ending supply of these P/PC dilemmas.

Leadership: As a leader, you can often get short-term results with carrots and sticks. Carrots tempt your team into producing. And sticks scare them into it. But unfortunately, there are never enough carrots and sticks over the long run. Instead, some of my favorite leaders like hall-of-fame basketball coach John Wooden preferred to motivate with pride and not fear. His long-term results spoke for themselves – 10 national championships in a 12 year period!

Apply P/PC Balance to Your Life

The main point is to think about the situations in your life. Are you spending too much time in either of the two extremes?

Excessive focus on production (golden eggs)

Excessive focus on production capacity (the goose)

If you are all about short-term results, how can you nurture the golden goose?

If you are lacking results, how can you shift focus towards the golden eggs right now?

Your answers to the questions above and the actions you take will make you a more effective person. Good luck!

What areas do you need to work on? Have you found any helpful ways to shift between production and production capacity when you get out of balance?

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Comments

This is so timely for me! I have been pondering lately how to balance my family’s finances so that we do spend on what matters now but also set enough aside for longterm goals. And just this morning, as I was driving to work, I was thinking about how much time and mental energy I have been spending lately on the “urgent” stuff (usually emails that need a quick or even immediate response) and not setting aside time to think about and plan more complex initiatives. Finding the right balance is those things is not easy, not least because it varies from time to time and not everyone involved has the same sense of what constitutes the right balance.

I agree that balance is tricky, especially for small business owners and investors with a few buildings.

On one hand you want to grow fast and increase the money coming in, but on the other, you want everything kept under control… not too much debt, systems and procedures in place, sorting all required documents, being ready for tax time, etc.

Actually, maybe the perfect balance is alternating between, as I’ve clearly noticed how sometimes just taking 2 hours to clean the office can reduce anxiety by a lot, especially when you have too much on your plate.

It might also be the nuance between working on your business and working in your business… if too much energy is spent on the plethora of small tasks that come daily, you can’t form a good vision and strategy of where you’ll want to be in 3-5-10 years and how you can ensure it.

Overall great article and I sure will revisit it when I find myself in a rut or overwhelmed.

I didn’t think of it from the Emyth – working on your business vs working in your business – but that’s a good point. The PC is certainly working on your business, and the P is working in it. Both are important for their own reasons.

Chad, another great article! Though I was always an employee of a company, I grew my commercial lending business by ALWAYS focusing on the long term. I had a decent 15 year track record of success but that long term focus paid off those last few years. While it was never easy, the amount of high quality potential business that flowed my direction seemed to speed up during that time. I picture it like that compound investing curve of your investments, that at first, it isn’t that impressive but once you hit a certain point, the growth becomes exponential.

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